Bank of Japan (BoJ) Governor Kazuo Ueda spoke in the Japanese parliament on Tuesday. Ueda warned of the potential need for policy response due to foreign exchange impacts and he will closely monitor recent currency fluctuations.  

Key quotes

“Monetary policy is aimed at impacting inflation, not the yen rate.”

“Will examine the impact of the movement of the yen on the economy.”

“FX moves could have a big impact on the economy and prices, and so the impact of FX volatility could be bigger than in the past.”

“BoJ does not seek to directly control FX rates with monetary policy.”

“FX moves are among various factors that affect the economy and prices.”

“Weak yen pushes up import costs, has an impact on the economy in other ways, such as via demand.”

“To adjust easing as per rising price trend.”

The Bank of Japan may need to respond via monetary policy if such impact for yen moves affects trend inflation.”

“We expect trend inflation to gradually head towards 2%.”

“We will adjust monetary policy as appropriate if trend inflation heads toward 2% as we project, or if we see the risk of inflation overshooting our forecast